A growing number of Phoenix-area small businesses are moving their computing needs to the “cloud,” according to the owner of a Surprise-based Internet company.
Wayne Klug, president of Spectrum Technology Solutions, said he started the company in 2009 to help local businesses save money on information technology.
Spectrum now has about 60 clients, and Klug said he is expecting that number to increase rapidly as more owners of medium-size and small businesses become aware of cloud computing’s cost-saving benefits.
Cloud computing comes in various forms but generally involves the outsourcing of information-technology functions to a third party that lets customers access those services online.
For instance, instead of purchasing high-speed computers to process and store data, a company can lease computing power when needed from a third party whose high-speed computers can be accessed online.
Software as a service, or SaaS, is one of the leading uses of cloud computing, in which customers access software applications using a Web browser instead of buying software and installing it on desktops.
Klug said businesses that subscribe to cloud-based services save money because they no longer have to buy expensive computing equipment or software. Instead, they lease computing, data-storage and software services on a per-use basis, allowing them to scale up or down as needed.
“It’s really a game-changer as far as how it’s changing IT departments,” he said.
Spectrum Technology is itself a small business, with just five employees including Klug. He said the company is able to provide cloud services affordably by partnering with a firm called LevelCloud, a wholesaler of cloud-computing services.
Chad Trott, president of Phoenix-based El Sol Construction, said he became a Spectrum Technology customer in October 2010 after realizing how much money he had spent on now-obsolete Web servers and other high-tech equipment.
Trott estimates he has saved at least $45,000 since switching to cloud-computing services. He said outsourced IT services are particularly useful for the construction industry, which tends to go through frequent boom-and-bust cycles.
“With cloud computing, you can grow and expand as needed,” he said. “It’s really a dream come true.”
Klug said IT-industry analysts expect a mass migration of businesses to cloud computing by April 2014, when Microsoft Corp. plans to stop providing security updates and customer support for the Windows XP operating system and Microsoft Office 2003, both of which remain popular with businesses.
The end of support for XP and Office 2003 means businesses will have to upgrade to new operating systems and office software, he said, and switching to a cloud-computing provider will make that transition far less expensive.
A shift to cloud computing does have drawbacks, industry analysts say. One problem is control. Companies using cloud services are giving up a significant amount of control over their data to an outside company. Another is security. Cloud-based services require a constant, back-and-forth stream of data over the Internet, which can be far less secure than working with data inside a desktop or on a local-area network.
While some experts say the cloud-computing revolution will be a big job creator, it has resulted in the downsizing of many in-house IT departments and is expected to bring about even more layoffs.
Still, a recent study led by research firm IDC of Framingham, Mass., concluded that cloud computing would create more than 1 million jobs in the U.S. by 2015, including about 14,000 in the Phoenix area.
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